Title: Organising for reverse innovation in Western MNCs: the role of frugal product innovation capabilities

Authors: Marco Zeschky; Bastian Widenmayer; Oliver Gassmann

Addresses: Institute of Technology Management, University of St. Gallen, Dufourstrasse 40a, 9000 St. Gallen, Switzerland ' Institute of Technology Management, University of St. Gallen, Dufourstrasse 40a, 9000 St. Gallen, Switzerland ' Institute of Technology Management, University of St. Gallen, Dufourstrasse 40a, 9000 St. Gallen, Switzerland

Abstract: The burgeoning phenomenon of reverse innovation - i.e., innovations which are adopted first in the developing world - has attracted much academic and managerial attention. However, while existing literature has extensively discussed the risks and opportunities of reverse innovation for Western multinational companies (MNCs), there is little empirical insight into the question of how reverse innovation is organised in the firm. This article investigates how Western MNCs of the healthcare and electronics industries organise their international R&D for reverse innovation. Based on the insights of four case studies, we find that the location of the product mandate (i.e., at the headquarters or the subsidiary) is independent of the MNC's ability to generate reverse innovation. In contrast, we find that the design and development of reverse product innovations are always located in the MNC's subsidiary based in a resource-constrained environment. We argue that the development of frugal product innovation capabilities is a critical success factor in the development of reverse innovation. The article holds important implications for theory and management practice.

Keywords: reverse innovation; frugal innovation; Western MNCs; multinational corporations; global product mandate; emerging economies; China; global R&D; research and development; innovation capabilities; critical success factors; CSFs.

DOI: 10.1504/IJTM.2014.059948

International Journal of Technology Management, 2014 Vol.64 No.2/3/4, pp.255 - 275

Accepted: 13 Oct 2013
Published online: 19 Mar 2014 *

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